Cuba is the second poorest country in the Caribbean Sea, having destroyed its price system in the name of socialism.
Located 90 miles south of Florida, it is the only Communist country in the Western Hemisphere and is considered the worst dictatorship in this Hemisphere. Its high level of freedom and prosperity was destroyed by dictator Fidel Castro.
Cuba kills or jails people who try to leave it. When a group of people tried to leave in 1994, a Cuban navy ship rammed their boat and shot water cannons at survivors, drowning 43 people.[1]

... legend of that handful of long-haired, bearded beatniks who overthrew a "brutal U.S.-backed dictatorship that repressed and impoverished Cuba"

... in fact Cuba had a higher standard of living in 1958 than half of Europe, a larger middle class than Switzerland, a more highly unionized work force than the U.S., more doctors and dentists per capita than Great Britain, more cars and televisions per capita than Canada or Germany, [and] was inundated with immigrants.[2]

Contents

History

People

Cuba is a multiracial society with a population of mainly Spanish and African origins. Recent mitochondrial DNA evidence indicates that genetic contributions of peoples of the neo-Taino nations such as the Siboney, is not negligible.

Religion

Cathedral of La Habana.

The Roman Catholic Church estimates that 60% of the population is Catholic. Membership in Protestant churches is estimated to be 5% and includes Baptists, Pentecostals, Jehovah's Witnesses, Seventh-day Adventists, Presbyterians, Anglicans, Episcopalians, Methodists, Religious Society of Friends (Quakers), and Lutherans. Other groups include the Greek Orthodox Church, the Russian Orthodox Church, Muslims, Jews, Buddhists, Baha'is, and the Church of Jesus Christ of Latter-day Saints (Mormons). The remainder of the population is either non-practicing of any particular religion, atheist, or agnostic.

Some sources estimate that as much as 80% of the population consults with practitioners of religions with West African roots, such as Santeria or Yoruba, for assistance with specific immediate problems such as bearing children, curing illness, or ensuring safe passage. In 2008 a historically secretive group affiliated with Afro-Cuban religious practices, the Abalcua Society, opened a public office.

The Cuban Council of Churches (CCC) is a private, officially sanctioned umbrella organization that works closely with the Government and includes 25 religious organizations as full members, 9 associate members, and 3 with observer status. During the reporting period the Greek Orthodox Church and the Pentecostal Church of Sovereign Grace in Cuba became new full members. Three new communities were accepted as fraternal associate members: the Assembly of Christian Churches, the Quadrangular Pentecostal Church, and the Reflection and Solidarity Group Msgr. Oscar Arnulfo Romero. The Christian New Life Church became an observer member. The CCC is structured into 5 "zones" across the island and, according to the CCC's leadership, represents approximately 100,000 Christians. Most CCC members are officially recognized by the State, although several, including the Evangelical Lutheran Church, lack legal status and are recognized through their membership in the CCC. Other officially recognized groups, including the Catholic Church, Jehovah's Witnesses, and the small Jewish and Muslim communities, do not belong to the CCC.

Catholic Church officials estimate that 10% of baptized Catholics attend Mass regularly. Membership in Protestant churches increased and was estimated at 550,000 persons. The Baptists, represented in four different conventions, are possibly the largest Protestant denomination, followed closely by the Pentecostal churches, particularly the Assembly of God. The number of Pentecostals is believed to be rising sharply. Jehovah's Witnesses report more than 86,000 members, the Seventh-day Adventists 30,000, and Methodists 18,000. There are 22,000 Anglicans and 15,000 Presbyterians. The Jewish community has 1,500 members, with 1,200 of them residing in Havana. The Muslim population consists of 6,000 temporary residents and 300 native-born. There are small communities of Quakers (300) and Mormons (30).

The largest organized religion is the Roman Catholic Church, but evangelical Protestant denominations continue to grow rapidly. Afro-Cuban religions, a blend of native African religions and Roman Catholicism, are widely practiced in Cuba. Officially, Cuba has been an atheist state for most of the Castro era. In 1962, the government of Fidel Castro seized and shut down more than 400 Catholic schools, charging that they spread dangerous beliefs among the people. In 1991, however, the Communist Party lifted its prohibition against religious believers seeking membership, and a year later the government labeled itself as secular instead of atheist.

While the Cuba has laws on the books supposedly granting the right of citizens to freedom of religion, the government de facto restricts that freedom.

"This government maintains an active opposition to house churches, which have grown dramatically since petroleum for driving to traditional churches is no longer available."

"Christian workers entering the country often have items or materials confiscated by customs officials and are rarely allowed to enter if the true reasons for their coming is known."[3]

Twenty-two denominations, including Presbyterians, Episcopalians, and Methodists, are members of the Cuban Council of Churches (CCC). Most CCC members are officially recognized by the State, though several, including the Evangelical Lutheran Church, are not registered and are recognized only through their membership in the CCC. Another 31 officially recognized denominations, including Jehovah's Witnesses and the small Jewish community, do not belong to the CCC. The government does not favor any one particular religion or church; however, the government appears to be most tolerant of those churches that maintain close relations to the State through the CCC. Unregistered religious groups experience various degrees of official interference, harassment, and repression. The Ministry of Interior engages in active efforts to control and monitor the country's religious institutions, including through surveillance, infiltration and harassment of religious professionals and practitioners. The most independent religious organizations—including the Catholic Church, the largest independent institution in Cuba today—continue to operate under significant restrictions and pressure imposed on them by the Cuban regime. The Cuban Government continues to refuse to allow the church to have independent printing press capabilities, full access to the media, the ability to train enough priests for its needs or allow adequate numbers of foreign priests to work in the country, or the ability to establish socially useful institutions, including schools and universities, hospitals and clinics, and nursing homes. All registered denominations must report to the Ministry of Interior's Office of Religious Affairs.

The visit of Pope John Paul II in January 1998 was seen as an important, positive event for bringing a message of hope and the need for respect of human rights. Unfortunately, these improvements did not continue once the Pope left the island. While some visas were issued for additional priests to enter Cuba around the time of the visit, the regime has again sharply restricted issuance of visas. Moreover, despite explicit regime guarantees and repeated follow-up requests, the regime has refused to permit the Catholic Church to establish Internet connections or an intranet among dioceses on the Island. In a pastoral letter entitled "There is No Country Without Virtue" ("No Hay Patria Sin Virtud"), the Cuban Conference of Catholic Bishops in February 2003 openly criticized the government's strict control over the activities of the Catholic Church, especially state restrictions on religious education and Church access to mass media, as well as the increasingly amoral and irreligious character of Cuban society under Communist rule.

Other Cuban religious groups—including evangelical Christians, whose numbers continue to grow rapidly—also have benefited from the relative relaxation of official restrictions on religious organizations and activities. Although particularly hard hit by emigration, Cuba's small Jewish community continues to hold services in Havana and has members in Santiago, Camaguey, and other parts of the island. See also the Department's report on international religious freedom for further information.

Government

The Capitol

Cuba is a totalitarian state formerly controlled by Fidel Castro, who is chief of state, head of government, First Secretary of the PCC, and commander in chief of the armed forces. Castro sought to control most aspects of Cuban life through the Communist Party and its affiliated mass organizations, the government bureaucracy, and the state security apparatus. In March 2003, Castro announced his intention to remain in power for life, but has since ceded power to his brother, Raul Castro. In April 2018 he was replaced by Miguel Díaz-Canel. The Ministry of Interior is the principal organ of state security and control.

Since 1976, the National Assembly of People's Power, and its Council of State when the body is not in session, have supreme authority in the Cuban system. Since the National Assembly meets only twice a year for a few days each time, the 31-member Council of State wields power. The Council of Ministers, through its 9-member executive committee, runs the economy except for a tiny and shriveling open-market sector. Fidel Castro was President of the Council of State and Council of Ministers and his brother Raul serves as First Vice President of both bodies as well as Minister of Defense.

Courts are explicitly subordinated to the National Assembly and to the Council of State. Due process is routinely denied to Cuban citizens, particularly in cases involving political offenses. The constitution states that all legally recognized civil liberties can be denied to anyone who opposes the "decision of the Cuban people to build socialism." Citizens can be and are jailed for terms of 3 years or more for simply criticizing the communist system or Fidel Castro.

The Communist Party is Cuba's only legal political party. The party monopolizes all government positions, including judicial offices. Though not a formal requirement, party membership is a de facto prerequisite for high-level official positions and professional advancement in most areas, although a tiny number of non-party members have on extremely rare occasions been permitted by the controlling Communist authorities to serve in the National Assembly. The Communist Party or one of its front organizations approves candidates for any elected office. Citizens do not have the right to change their government. In March 2003, the government carried out one of the most brutal crackdowns on peaceful opposition in the history of Cuba when it arrested 75 human rights activists, independent journalists and opposition figures on various charges, including aiding a foreign power and violating national security laws. Authorities subjected the detainees to summary trials and sentenced them to prison terms ranging from 6 to 28 years. Amnesty International identified all 75 as "prisoners of conscience." The European Union (EU) condemned their arrests and in June 2003, it announced its decision to implement the following actions: limit bilateral high-level governmental visits, reduce the profile of member states' participation in cultural events, reduce economic assistance and invite Cuban dissidents to national-day celebrations. See also the Department's Country Report on Human Rights Practices for Cuba.

Although the constitution allows legislative proposals backed by at least 10,000 citizens to be submitted directly to the National Assembly, in 2002 the government rejected a petition known as the Varela Project, supporters of which submitted 11,000 signatures calling for a national referendum on political and economic reforms. Many of the 75 activists arrested in March 2003 participated in the Varela Project. In October 2003, Project Varela organizers submitted a second petition to the National Assembly with an additional 14,000 signatures. Since April 2004, some prisoners of conscience have been released, seven of whom were in the group of 75; all suffered from moderate to severe medical conditions and many of them continue to be harassed by state security even after their release from prison. Moreover, in response to a planned protest by activists at the French Embassy in Havana in late July 2005, Cuban security forces detained 33 opposition members, three of whom had been released on medical grounds. At least 16 other activists were either arrested or sentenced to prison since 2004 for opposing the Cuban Government. There has also been a resurgence of harassment of various activist groups, most notably the "Damas en Blanca," a group of wives of political prisoners.

On July 31, 2006 the Castro regime announced a "temporary" transfer of power from Fidel Castro to his brother Raul, who until that time served as head of the Cuban armed forces and second-in-command of the government and the Communist Party. It was the first time in the 47 years of Fidel Castro's rule that power had been transferred. The transfer took place due to intestinal surgery of an undetermined nature.

On February 19, 2008, Fidel Castro announced that he would officially step down as leader of Cuba. Five days later, on February 24, Raul Castro, Fidel's brother, was elected the new President of Cuba. On April 19, 2018 Castro was succeeded by Miguel Díaz-Canel.

Foreign Relations

Cuba's once-ambitious foreign policy has been scaled back and redirected as a result of economic hardship and the end of the Cold War. Cuba aims to find new sources of trade, aid, and foreign investment and to promote opposition to U.S. policy, especially the trade embargo and the 1996 Libertad Act. Cuba has relations with over 160 countries and has civilian assistance workers—principally physicians and nurses—in more than 20 nations.

Since the end of Soviet backing, Cuba appears to have largely abandoned monetary support for guerrilla movements that typified its involvement in regional politics in Latin America and Africa, though it maintains relations with several guerrilla and terrorist groups and provides refuge for some of their members in Cuba. Cuba's support for Latin guerrilla movements, its Marxist–Leninist government, and its alignment with the U.S.S.R. led to its isolation in the hemisphere. Cuba is a member of the Organization of American States (OAS), although its present government has been excluded from participation since 1962 for incompatibility with the principles of the inter-American system. Cuba hosted the Non-Aligned Movement (NAM) summit in September 2006 and will hold the NAM presidency until 2009. In the context of the NAM and its ordinary diplomacy, Cuba has developed friendly relations with Iran, North Korea and other rogue states.

American Embassy

Throughout the 1970s and 1980s, Cuba expanded its military presence abroad, spending millions of dollars in exporting revolutions; deployments reached 50,000 troops in Angola, 24,000 in Ethiopia, 1,500 in Nicaragua, and hundreds more elsewhere. In Angola, Cuban troops, supported logistically by the U.S.S.R., backed the Popular Movement for the Liberation of Angola (MPLA) in its effort to take power after Portugal granted Angola its independence. Cuban forces played a key role in Ethiopia's war against Somalia and remained there in substantial numbers as a garrison force for a decade. Cubans served in a non-combat advisory role in Mozambique and the Congo. Cuba also used the Congo as a logistical support center for Cuba's Angola mission. In the late 1980s, Cuba began to pull back militarily. Cuba unilaterally removed its forces from Ethiopia, met the timetable of the 1988 Angola-Namibia accords by completing the withdrawal of its forces from Angola before July 1991, and ended military assistance to Nicaragua following the Sandinistas' 1990 electoral defeat.

EU-Cuban diplomatic relations have suffered as a result of the March 2003 crackdown on dissidents. In June 2004, EU members imposed restrictive measures on Cuba including inviting dissidents to national day celebrations and suspending high-level meetings between EU members and the Cuban Government. In January 2005, though, the restrictions were suspended in an effort to re-engage the regime as a means of advancing the EU's policy of encouraging reform while preparing for the transition.

Spain is among the most important foreign investors in Cuba. The ruling Zapatero government continues Spain's longstanding policy of encouraging further investment and trade with Cuba. Cuba imports more goods from Spain (almost 13% of total imports) than from any other country. Spanish economic involvement with Cuba is exclusively centered on joint venture enterprises that provide financial benefit to the Cuban Government through state-owned firms. Spain's desire to provide support to its business community often impedes its willingness to pressure the Cuban Government on political reform and human rights issues.

Cuba's bilateral relationship with Venezuela has helped keep the Cuban economy afloat. The "Integral Cooperation Accord" signed by Fidel Castro and Venezuelan President Hugo Chavez in October 2000 laid the groundwork for a quasi-barter exchange of Venezuelan oil for Cuban goods and services that has since become a lifeline for Cuba. For Cuba, the benefits of the cooperation accord are subsidized petroleum and increased hard currency flows. The original agreement allowed for the sale, at market prices, of up to 53,000 barrels per day of crude oil and derivatives (diesel, gasoline, jet fuel, etc.) by PDVSA, Venezuela's state-owned petroleum company, to its Cuban counterpart, CUPET. The number of barrels of oil Venezuela began selling to Cuba has risen to over 90,000 barrels daily. Under the accord, PDVSA extended preferential payment terms to CUPET, including 90-day short-term financing instead of the 30 days offered to its other customers and, in lieu of a standard letter of credit backed by an international bank, PDVSA accepted IOUs from Cuba's Banco Nacional, the central banking entity responsible for servicing Havana's foreign debt. In August 2001, Venezuelan President Hugo Chavez amended the 2000 accord to allow Venezuela to compensate the Cuban Government in hard currency for any and all Cuban products and services originally intended as in-kind payment for Venezuelan oil. As a result, Cuban exports of goods and services to Venezuela climbed from $34 million in 2001 to more than $150 million in 2003. Venezuelan ministries are contracting with Cuba for everything from generic pharmaceuticals to pre-fabricated housing and dismantled sugar mill equipment. On April 28, 2005, Chavez and Castro signed 49 economic agreements in Havana, covering areas as diverse as oil, nickel, agriculture, furniture, shoes, textiles, toys, lingerie, tires, construction materials, electricity, transportation, health, and education. Venezuela is also committed to sending more than $400 million in various products duty free to Cuba and plans to open an office of state-owned commercial Venezuelan Industrial Bank (BIV) in Havana to finance imports and exports between the two countries, while Cuba will open an official Banco Exterior de Cuba in Caracas. Increased economic engagement along with the rapid growth in Cuban sales to Caracas has established Venezuela as one of the island's largest export markets.

A series of recent economic agreements between Cuba and China have strengthened trade between the two countries. Sino-Cuban trade totaled more than $525 million in 2004, according to China Customs statistics. This represents an increase of more than 47% over 2003. Most of China's aid involves in-kind supply of goods or technical assistance. During President Hu-Jintao's visit to Cuba in November 2004, China signed investment-related memoranda of understanding (MOUs) estimated at more than $500 million, according to press reports. If these MOUs are fully realized, they would represent a sharp increase in known Chinese investments in Cuba. In addition to these MOUs, a number of commercial accords were signed at the first-ever Cuba-China Investment and Trade Forum. China also plans to invest approximately $500 million in a nickel operation in Moa in the eastern province of Holguin. According to the MOU, Cuba will own 51% of the enterprise and Chinese-owned Minmetals the remaining 49%. Chinese and Venezuelan economic support, including investment and direct aid, have given Cuba the space to eliminate many of the tentative open market reforms Cuba put in place during the depth of its mid-1990s economic crisis.

The Russian prime minister visited Cuba in October 2006, signaling a new effort to expand trade and investment, albeit financed by Russian credit. Russia set aside, for the moment, more than US$20 billion in Soviet-era debt, restructured post-1991 debt, and extended a new credit line to Cuba. The new credit line is for US$355 million repayable over 10 years at an interest rate of five percent. The new credit is conditioned in that it must be used to purchase Russian cars, trucks, planes, as well as to finance Cuban energy and transport infrastructure projects, including air navigation systems. Russia further agreed to restructure US$166 million in debt accumulated since 1993. Both nations also signed an agreement on military equipment and technical services.

Defense

Raul Castro.

Under Castro, Cuba is a highly militarized society. From 1975 until the late 1980s, massive Soviet military assistance enabled Cuba to upgrade its military capabilities and project power abroad. The tonnage of Soviet military deliveries to Cuba throughout most of the 1980s exceeded deliveries in any year since the military build-up during the 1962 missile crisis.

With the loss of Soviet-era subsidies in the early 1990s, Cuba's armed forces have shrunk considerably, both in terms of numbers and assets. Combined active duty troop strength for all three services is estimated at 50,000 to 55,000 personnel (compared to some 235,000 on active duty 10 years ago) and much of Cuba's weaponry appears to be in storage. Cuba's air force, once considered among the best equipped in Latin America, no longer merits that distinction, though it still possesses advanced aircraft and weapons systems; the navy has become primarily a coastal defense force with no blue water capability. The Cuban army is still one of the region's more formidable, but it also is much reduced and no longer has the considerable resources necessary to project power abroad.

The military plays a growing role in the economy and manages a number of hotels in the tourist sector. The country's two paramilitary organizations, the Territorial Militia Troops and the Youth Labor Army, have a reduced training capability. Cuba also adopted a "war of the people" strategy that highlights the defensive nature of its capabilities. The government continues to maintain a large state security apparatus under the Ministry of Interior to repress dissent within Cuba, and in the last decade has formed special forces units to confront indications of popular unrest.

Human Rights Issues

Cuba's totalitarian regime controls all aspects of life through the Communist Party (CP) and its affiliated mass organizations, the government bureaucracy and the Department of State Security. The latter is tasked with monitoring, infiltrating and tormenting the country's beleaguered human rights community. The government continues to commit serious abuses, and denies citizens the right to change their government.

The government incarcerates people for their peaceful political beliefs or activities. The total number of political prisoners and detainees is unknown, because the government does not disclose such information and keeps its prisons off-limits to human rights organizations. As of July 1, 2006, at least 316 Cubans were being held behind bars for political crimes, according to the independent Cuban Commission for Human Rights and National Reconciliation.

From "Memorias series" by Roberto Fabelo

The government places severe limitations on freedom of speech and press. Reporters Without Borders calls Cuba the world's second biggest jailer of journalists. The constitution provides for freedom of speech and press insofar as they "conform to the aims of a socialist society." The government considers the Universal Declaration of Human Rights and foreign mainstream magazines and newspapers to be enemy propaganda. Access to the Internet is strictly controlled and given only to those deemed ideologically trustworthy.

Freedom of assembly is not a right in today's Cuba. The law punishes any unauthorized assembly of more than three persons. The government also restricts freedom of movement and prevents some citizens from emigrating because of their political views. Cubans need explicit "exit permission" from their government to leave their country, and many people are effectively held hostage by the Cuban government, despite the fact that they have received travel documents issued by other countries.

The government does not tolerate dissent. It targets dissenters by directing militants from the CP, the Communist Youth League, Committees for the Defense of the Revolution, the Federation of Cuban Women, the Association of Veterans of the Cuban Revolution, and other groups to stage a public protest against the dissenter, usually in front of his/her house. These protests, called "acts of repudiation," involve the shouting of insults and the occasional use of violence. The events generate intense fear and are aimed at ostracizing and intimidating those who question the government's policies.

Prison conditions are harsh and life-threatening. Although physical torture is rare, cruel treatment of prisoners – particularly political prisoners and detainees – is common. Prison authorities frequently beat, neglect, isolate and deny medical treatment to inmates. Authorities often deny family visits, adequate nutrition, exposure to sunshine, and pay for work. Overcrowding is rife. Inmates friendly with prison guards often receive preferential treatment. This leads to abuse, whereby connected inmates assault others with impunity. Desperation inside the country's estimated 200 prisons and work camps is at high levels and suicides and acts of self-mutilation occur. Thousands of Cubans are currently imprisoned for "dangerousness," in the absence of any crime.

Worker rights are largely denied. The law does not allow Cuban workers to form and join unions of their choice. The government-approved unions do not act as trade unions, promote worker rights or protect the right to strike; rather, they are geared toward ensuring that production goals are met. Some workers lose their jobs because of their political beliefs. Salaries are not high enough to meet food and clothing costs; consequently, many Cubans are forced into small-scale embezzlement or pilfering from their employers.

Even after Castro's death, people still faced serious persecution if they criticized the dictator, as in the example of a Christian leader who was arrested in March 2017 and sentenced to three years in prison, a few months after his young children were arrested.[4]

Economy

The Cuban Government continues to adhere to socialist principles in organizing its state-controlled economy. Most of the means of production are owned and run by the government and, according to Cuban Government statistics, about 75% of the labor force is employed by the state. The actual figure is closer to 93%, with some 150,000 small farmers and another 150,000 "cuentapropistas," or holders of licenses for self-employment, representing a mere 2.1% of the nearly 4.7 million-person workforce. Labor is an economic input that is entirely under the control of the government to the point that Cubans have been sent overseas, so that their labor can be used to repay debt, while workers are kept secluded and paid a typical Cuban wage of $18 a month.[5]

Varadero resources.

The Cuban economy is still recovering from a decline in gross domestic product of at least 35% between 1989 and 1993 as the loss of Soviet subsidies laid bare the economy's fundamental weaknesses. To alleviate the economic crisis, in 1993 and 1994 the government introduced a few market-oriented reforms, including opening to tourism, allowing foreign investment, legalizing the dollar, and authorizing self-employment for some 150 occupations. These measures resulted in modest economic growth; the official statistics, however, are deficient and as a result provide an incomplete measure of Cuba's real economic situation. Living conditions at the end of the decade remained well below the 1989 level. Lower sugar and nickel prices, increases in petroleum costs, a post-September 11, 2001 decline in tourism, devastating hurricanes in November 2001 and August 2004, and a major drought in the eastern half of the island caused severe economic disruptions. Growth rates continued to stagnate in 2002 and 2003, while 2004 and 2005 showed some renewed growth. Moreover, the gap in the standard of living has widened between those with access to dollars and those without. Jobs that can earn dollar salaries or tips from foreign businesses and tourists have become highly desirable. It is not uncommon to see doctors, engineers, scientists, and other professionals working in restaurants or as taxi drivers.

Castro's regime has pulled back on earlier market reforms and is seeking tighter state control over the economy. The Cuban Government is aggressively pursuing a policy of recentralization, making it increasingly difficult for foreigners to conduct business on the island. Likewise, Cuban citizens are adversely affected by reversion to a peso economy.

Prolonged austerity and the state-controlled economy's inefficiency in providing adequate goods and services have created conditions for a flourishing informal economy in Cuba. As the variety and amount of goods available in state-run peso stores has declined, Cubans have turned increasingly to the black market to obtain needed food, clothing, and household items. Pilferage of items from the work place to sell on the black market or illegally offering services on the sidelines of official employment is common, and Cuban companies regularly figure 15% in losses into their production plans to cover this. Recognizing that Cubans must engage in such activity to make ends meet and that attempts to shut the informal economy down would be futile, the government concentrates its control efforts on ideological appeals against theft and shutting down large organized operations. A report by an independent economist and opposition leader speculates that more than 40% of the Cuban economy operates in the informal sector. Since 2005, the government has carried out a large anti-corruption campaign as it continues efforts to recentralize much of the economy under the regime's control.

Sugar, which has been the mainstay of the island's economy for most of its history, has fallen upon troubled times. In 1989, production was more than 8 million tons, but by the mid-1990s, it had fallen to around 3.5 million tons. Inefficient planting and cultivation methods, poor management, shortages of spare parts, and poor transportation infrastructure combined to deter the recovery of the sector. In June 2002, the government announced its intention to implement a "comprehensive transformation" of this declining sector. Almost half the existing sugar mills were closed, and more than 100,000 workers were laid off. The government has promised that these workers will be "retrained" in other fields, though it is unlikely they will find new jobs in Cuba's stagnant economy. Moreover, despite such efforts, the sugar harvest continued to decline, falling to 2.1 million tons in 2003, the smallest since 1933. The harvest was not much better in 2004, with 2.3 million tons, and even worse in 2005, with 1.3 million tons.

Beaches at Holguin.

In the mid-1990s, tourism surpassed sugar as the primary source of foreign exchange. Tourism figures prominently in the Cuban Government's plans for development, and a top official cast it as at the "heart of the economy." Havana devotes significant resources to building new tourist facilities and renovating historic structures for use in the tourism sector. Roughly 1.7 million tourists visited Cuba in 2001, generating about $1.85 billion in gross revenues; in 2003, the number rose to 1.9 million tourists, predominantly from Canada and the European Union, generating revenue of $2.1 billion. The number of tourists to Cuba in 2004 crossed the 2 million mark (2.05 million), including the so-called "medical tourists" from other Latin American countries seeking free medical treatment at Cuban facilities. In 2005 the number of tourists increased to 2.32 million.

Nickel is now the biggest earner among Cuba's goods exports. The nickel industry has been operating close to full capacity and therefore currently stagnant, but it is benefiting from unprecedented increases in world market prices. Revenues have more than doubled from $450 million in 2001 to $1 billion in 2005. The government is making attempts to increase extraction capacity.

Remittances also play a large role in Cuba's economy. Cuba does not publish accurate economic statistics, but academic sources estimate that remittances total from $600 million to $1 billion per year, with most coming from families in the United States. U.S. regulation changes announced in June 2004 allow remittances to be sent only to the remitter's immediate family; they cannot be remitted to certain Cuban Government officials and members of the Cuban Communist party; and the total amount of family remittances that an authorized traveler may carry to Cuba is now $300, reduced from $3,000. (See also the Commission on Assistance to a Free Cuba report at www.cafc.gov, cited below.) The Cuban Government captures these dollar remittances by allowing Cuban citizens to shop in state-run "dollar stores," which sell food, household, and clothing items at a high mark-up averaging over 240% of face value.

Beginning in November 2004, Castro mandated that U.S. dollars be exchanged for "convertible pesos"—a local currency that can be used in special shops on the island but has no value internationally—for a 10% charge. The 10% conversion fee disproportionately affects Cubans who receive remittances from relatives in the U.S.

To help keep the economy afloat, Cuba has actively courted foreign investment, which often takes the form of joint ventures with the Cuban Government holding half of the equity, management contracts for tourism facilities, or financing for the sugar harvest. A new legal framework laid out in 1995 allowed for majority foreign ownership in joint ventures with the Cuban Government. In practice, majority ownership by the foreign partner is nonexistent. Of the 540 joint ventures formed since the Cuban Government issued the first legislation on foreign investment in 1982, 397 remained at the end of 2002, and 287 at the close of 2005. Due in large part to Castro's recentralization efforts, it is estimated that one joint venture and two small cooperative production ventures have closed each week since 2000. Responding to this decline in the number of joint ventures, a spokesperson for the Ministry of Foreign Investment explained that foreign investment is not a pillar of development in and of itself. Moreover, the hostile investment climate, characterized by inefficient and overpriced labor imposed by the communist government, dense regulations, and an impenetrable bureaucracy, continue to deter foreign investment. Foreign direct investment flows decreased from $448 million in 2000 to $39 million in 2001 and were at zero in 2002. In July 2002, the European Union, through its embassies in Havana, transmitted to the Cuban Government a document that outlined the problems encountered in operating joint ventures in Cuba. Titled "The Legal and Administrative Framework for Foreign Trade and Investment by European Companies in Cuba," the paper noted the difficulty in obtaining such basic necessities as work and residence permits for foreign employees—even exit visas and drivers licenses. It complained that the Government of Cuba gave EU joint venture partners little or no say in hiring Cuban staff, often forced the joint venture to contract employees who were not professionally suitable, and yet reserved to itself the right to fire any worker at any time without cause. It noted administrative difficulties in securing financing and warned that "the difficulties of state firms in meeting their payment obligations are seriously threatening some firms and increasing the risk premium which all operators have to pay for their operations with Cuba." The Cuban Government offered no response.

Investors are also constrained by the U.S.-Cuban Liberty and Democratic Solidarity (Libertad) Act that provides sanctions for those who "traffic" in property expropriated from U.S. citizens. More than a dozen companies have pulled out of Cuba or altered their plans to invest there due to the threat of action under the Libertad Act.

In an attempt to provide jobs for workers laid off due to the economic crisis and bring some forms of black market activity into more controllable channels, the Cuban Government in 1993 legalized self-employment for some 150 occupations. This small private sector is tightly controlled and regulated. Set monthly fees must be paid regardless of income earned, and frequent inspections yield stiff fines when any of the many self-employment regulations are violated. Rather than expanding private sector opportunities, in recent years, the government has been attempting to squeeze more of these private sector entrepreneurs out of business and back to the public sector. Many have opted to enter the informal economy or black market, and others have closed. These measures have reduced private sector employment from a peak of 209,000 to less than 100,000 now. Moreover, a large number of those people who nominally are self-employed in reality are well-connected fronts for military officials. No recent figures have been made available, but the Government of Cuba reported at the end of 2001 that tax receipts from the self-employed fell 8.1% due to the decrease in the number of these taxpayers. Since October 1, 2004, the Cuban Government no longer issues new licenses for 40 of the approximately 150 categories of self-employment, including for the most popular ones, such as private restaurants.

In June 2005, 2,000 more licenses were revoked from self-employed workers as a means to reassert government control over the economy and to stem growing inequalities associated with self-employment. The licenses for self-employed workers were typically for service-oriented work, allowing the Cuban people to eke out a small living in an otherwise impoverished state. Moreover, workers in Cuba's tourist sector—at resorts where native Cubans are prohibited unless they are on the job—have been prohibited by a Ministry of Tourism regulation from accepting gifts, tips, or even food from foreigners, in a further attempt at increasing the tourist apartheid that exists on the island.

Oil pump at Havana.

A 2004 UN Economic Commission on Latin America and the Caribbean (ECLAC) report recommends that Cuba "redesign the parameters of competition in the public, private and cooperative sectors [and] redefine the role of the state in the economy." It recommends more flexibility in self-employment regulations, property diversification, economic decentralization, and a role for the market. The Cuban Government, however, is today reversing the economic liberalization of the 90s and re-centralizing its economy. Evidence of this is found in the decline in the number of firms participating in the perfeccionamiento empresarial, or entrepreneurial improvement (EI), program, which is based on capitalist management techniques. EI was instituted in the 1980s as a military-led pilot project, and in 1998, the Cuban Government extended it from military to civilian "parastatals," reportedly to foster capitalist competitiveness. At first, the government highlighted participating companies' achievements in cutting costs and boosting profitability and quality and suggested that the increased autonomy of state managers under EI was producing an efficient form of socialism with a strong link between pay and performance. However, many in the Communist Party, even Castro himself, resisted EI. Many of the original participants have since left the program and participating firms have seen little growth in revenue. The EI program has fallen far short of expectations and the Cuban Government no longer heralds its successes or its future prospects. In 2003 the Cuban Government also tightened foreign exchange controls, requiring that state companies hold money in convertible pesos and obtain special authorization from the central bank before making hard currency transactions. Practically speaking, this restricted companies from using the dollar for internal trade. Following this, in 2004 the government announced that all state entities must stop charging in U.S. dollars and charge only in pesos for any products and services not considered a part of a company's "fundamental social objective." It also recently implemented new requirements to channel imports through monopolistic Soviet-style wholesale distribution companies.

Cuba's precarious economic position is complicated by the high price it must pay for foreign financing. The Cuban Government defaulted on most of its international debt in 1986 and does not have access to credit from international financial institutions like the World Bank, which means Havana must rely heavily on short-term loans to finance imports, chiefly food and fuel. Because of its poor credit rating, an $11 billion hard currency debt, and the risks associated with Cuban investment, interest rates have reportedly been as high as 22%. In 2002, citing chronic delinquencies and mounting short-term debts, Moody's lowered Cuba's credit rating to Caa1 -- "speculative grade, very poor." Dunn and Bradstreet rate Cuba as one of the riskiest economies in the world.

Health-care

Health care in Cuba follows the model of socialized medicine; all doctors are employees of the government, and the government does not charge citizens for health care, though many believe the services provided are alarmingly inferior for anyone but the party elite. Fred Thompson wrote:

"Castro won't allow observers in to monitor his nation's true state, but defectors tell us that many Cubans live with permanent malnutrition and long waits for even basic medical services. Many treatments we take for granted aren't available at all -- except to the Communist elite or foreigners with dollars. For them, Castro keeps "show" clinics equipped with the best medicines and technologies available."[6]

The country's chief neurosurgeon, Hilda Morina, publicly protested the government's role in the deterioration of the health care system.

Education

According to the CIA World Factbook, the education system has achieved a 97% literacy rate on the island.[7]

Assistance at universities even in the provinces, while nominally free, requires demonstration of loyalty to the government, such as belonging to the informer network Comités de Defensa de la Revolución, the Militias, and assistance at pro-government demonstrations.[8] In pre-Castro times university fees were waved on presentation of proof of lack of means,